Mortgage fraud is "up 400 percent in the last five years."
Pam Bondi on Saturday, July 31st, 2010 in a Bay News 9/CFN 13 debate.
Pam Bondi says mortgage fraud is up 400 percent
At their first televised debate, the three Republican candidates for attorney general got a chance to address why fraud seemed to be so rampant in Florida and what they, if elected, would do to stop it.
Lt. Gov. Jeff Kottkamp talked about Medicaid fraud, and how the state must do a better job recouping that money. Former Agency for Health Care Administration secretary Holly Benson talked about Florida being ranked No. 1 in terms of automobile accident fraud.
Former Hillsborough prosecutor Pam Bondi then zeroed in on mortgage fraud.
"Mortgage fraud is through the roof," Bondi said during the hour-long debate taped on July 31, 2010, for Bay News 9 in Tampa Bay and CFN 13 in Orlando and broadcast the following day. "It's up 400 percent in the last five years. That's outrageous. We shouldn't have to be dealing with that."
It's a simple, but staggering assertion -- and one we thought was worth exploring.
First things first, Bondi's campaign told us she was referring to nationwide statistics and not just Florida. That's an important distinction because the question was related to Florida.
Still, the campaign turned us to a Department of Treasury fraud report to back up her claim. Using FBI statistics, Treasury said that the FBI investigated more than 2,100 mortgage fraud cases in 2009, a 400 percent increase from five years ago (Page 7 of the report). The report, dated June 14, 2010, attributes the rise in mortgage fraud investigations to "declining economic conditions," "liberal underwriting" and "declining home values."
The FBI's own report produces slightly different numbers, but a similar percentage increase.
From 2005-2009, the FBI reported its mortgage fraud investigations increased from 721 to 2,794 -- a 387.5 percent increase. From 2006-2010, the pending mortgage fraud investigations are 3,029 -- which would translate to a nearly 344 percent increase over that five-year period.
You can see the bureau's entire report on mortgage fraud here, which includes descriptions on current mortgage fraud scams. In a credit enhancement scheme, for example, a mortgage fraud perpetrator artificially boosts a borrower's credit to qualify him for a loan. Other types of fraud include bogus appraisals, or fake foreclosure rescue schemes.
The FBI reports that mortgage fraud is particularly an issue in Florida.
In 2009, the Tampa FBI field office opened more mortgage fraud investigations than any other FBI office in the country, the FBI said. Mortgage fraud investigations spiked 363 percent in Tampa in one year, according to the FBI, from 41 in 2008 to 190 in 2009.
Florida also ranked first in the nation in same-day property flips, according to the FBI. (An exchange of property that occurs on the day of sale is considered suspect for illegal property flipping).
U.S. Attorney General Eric Holder has used the FBI data to make the case for additional resources and legislation to combat mortgage fraud, and in particular noted that FBI investigations are up "almost 400 percent from five years ago."
But the FBI isn't the only agency that investigates mortgage fraud.
The Financial Crimes Enforcement Network, which is part of the Department of Treasury, collects and tracks Suspicious Activity Reports of mortgage fraud that are submitted anonymously from financial institutions across the country. The Suspicious Activity Reports are like tips, said spokesman Bill Grassano. Those tips can either lead to investigations by some 300 law enforcement agencies across the country, or help identify trends. In other cases, there was no crime.
Reports of possible mortgage fraud increased from 25,931 in 2005 to 67,360 in 2009, according to the Financial Crimes Enforcement Network. That's a big increase, about 260 percent, but not as large as the increase in investigations reported by the FBI.
We also checked in with the Florida Department of Law Enforcement to see if the agency had any statewide numbers. FDLE spokeswoman Heather Smith said the agency does not track specifically the number of mortgage fraud cases statewide. Smith provided PolitiFact Florida with two FDLE mortgage fraud assessment reports, from 2005 and 2007, that use both FBI investigation figures and the Suspicious Activity Reports to highlight national trends.
Back to Bondi's statement. She said mortgage fraud is up "400 percent in the last five years." Bondi has her numbers right, but the nearly 400 percent increase is referring specifically to FBI investigations of mortgage fraud nationwide, and does not account for state and local investigations, or information collected through the Financial Crimes Enforcement Network. Bondi could have been more specific with where her figure was coming from. As such, we rate her statement Mostly True.
Published: Monday, August 2nd, 2010 at 6:24 p.m.
Florida Republican attorney general debate, Aug. 1, 2010
Pam Bondi campaign, interview with Kim Kirtley Aug. 2, 2010
Florida Department of Law Enforcement, interview with Heather Smith, Aug. 2, 2010
Financial Crimes Enforcement Network, interview with Bill Grassano, Aug. 2, 2010
Financial Crimes Enforcement Network, Suspicious Activity Report by Depository Institution, Exhibit 5
Dept. of the Treasury, Office of Thrift Supervision, fraud and insider abuse bulletin, June 14, 2010
Department of Justice, Attorney General Eric Holder Testifies Before the Financial Crisis Inquiry Commission, Jan. 14, 2010
FBI, 2009 Mortgage Fraud Report "Year in Review
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